Almost 20,000t of EU milk powder now in intervention

Almost 20,000t of skimmed milk powder has now been offered to public intervention, according to latest figures from the Milk Market Observatory.

Its figures show that, last week, a further 2,100t was offered to intervention. To date nine countries have used the measure in recent months as global dairy markets continue to offer poor returns for dairy products.

Last week, France became the ninth country to offer skimmed milk powder to public intervention joining Ireland, Belgium, Denmark, Latvia, Lituania, Finland, UK and Poland.

Ireland has to date offered over 1,600t of milk powder to intervention.

Recent months have seen continued calls for the European Commission to increase intervention prices.

However, the European Commissioner for Agriculture and Rural Development Phil Hogan has been clear all the way through the current dairy market downturn that he is against raising intervention prices.

He doesn’t believe that such a measure is the right response to what is expected to be a relatively short-term market imbalance, recalling that the co-legislators reconfirmed the intervention price level as recently as 2013.

Hogan said it would send a wrong signal to the marketplace, as operators would not be encouraged to reduce milk production.

How does public intervention function?

One of the traditional safety net measures of the CAP is public intervention whereby, if market prices drop to a particular reference threshold, operators can then sell it to the Commission at this level.

For dairy, the reference price is equivalent to 21.7c/L and intervention only covers the basic products of butter and Skimmed Milk Powder (SMP).

The product then belongs to the Commission, and it is the Commission which is then responsible for selling these volumes back onto the market in future when prices have recovered.

Under current rules, there is an annual limit of 30,000t of butter and 109,000t of SMP on public intervention purchases. If there is still demand for intervention above these volumes, then this should be done via a tendering system, where the Commission has the right to reject offers according to the price that is offered.